Delay in derivatives trading on SGX

Lobby at Singapore Exchange (SGX).
Lobby at Singapore Exchange (SGX).PHOTO: ST FILE

Nikkei 225 Futures the biggest contract hit by problem in newly installed trading system; MAS asks SGX to probe

A problem in a newly installed trading system forced the Singapore Exchange (SGX) to delay the start of some derivatives trading yesterday for about an hour.

The delay, which was announced at around 8.50am, affected the expiring December Nikkei 225 Futures and several other contracts.

The Monetary Authority of Singapore (MAS) has asked SGX to probe the delay and report the findings.

"It's disappointing to see these trading system issues. The trading systems are the most important part of an exchange," said a trader, who asked not to be named.

"But I guess we should accept that disruptions are unavoidable, and one hour isn't too long compared to the half-day glitches previously. On my side, there wasn't too much commotion (yesterday) morning."

An SGX statement issued around noon said: "(The issue) was detected by our monitoring processes and addressed immediately. The affected contracts commenced trading as per normal at 10am."

It added that a new derivatives trading and clearing system was implemented on Nov 14.

An SGX spokesman declined to specify the nature of the issue but said the Nikkei 225 Futures was the biggest contract affected.

The delay was yet another in a run of technical issues that have hit SGX. On July 14, its securities trading was suspended in late morning and did not resume until the next day. The outage - SGX's most severe - was caused by a disk failure.

In late 2014, SGX was hit by two major glitches that drew stern reprimands from MAS, as well as a moratorium on fee increases for the securities and derivatives markets until system improvements were made.

Meanwhile, SGX released its latest monthly market data showing healthy trading activities last month for both securities and derivatives products.

The total securities market turnover value was $29.3 billion last month, up 49 per cent from October and 51 per cent from the same month last year. The daily average value was $1.3 billion, up 43 per cent over October and 37 per cent year on year.

The strong flow reflected the global rally following Mr Donald Trump's election victory. The major Wall Street indices are at historic highs, while Singapore's benchmark Straits Times Index was up 3.2 per cent last month.

In the derivatives segment, SGX's total volume last month was 16.6 million contracts, up 43 per cent on October, and 22 per cent higher from a year earlier.

The Nikkei 225 Index Futures volume was 1.9 million contracts, up 52 per cent from October and 22 per cent from November last year.

The most active contract was again the FTSE China A50 Index Futures, with a volume of 6.4 million. This was up 53 per cent on October but down 2 per cent year on year.

A version of this article appeared in the print edition of The Straits Times on December 09, 2016, with the headline 'Delay in derivatives trading on SGX'. Print Edition | Subscribe